The Lithium Market in 2025: Production, Consumption, and the Gaps in Reporting

Unpacking the real supply and demand metrics and exploring the context often glossed over in mainstream reporting.

The metric tonnage of information available to the retail lithium investor could stun a team of oxen in their tracks. Yet, as this information filters through articles, it is often stripped of nuance, reduced to headlines, and shaped by the biases of analysts or journalists. The supply chain is particularly prone to this oversimplification. For example, a recent carboncredits.com article cites International Energy Agency (IEA) supply and demand figures. However, it omits key details on how they are affected by preexisting inventories, as well as where and how the raw materials used in battery manufacturing are processed. This leaves an incomplete picture that, while unintentional, obscures how the lithium market truly functions.

At its core, the lithium-ion market mirrors any supply chain that relies on a key metal or mineral, with prices driven by the financial basics of supply and demand. But what often goes undefined in reporting—and therefore unclear to retail investors—are the actual dynamics behind these metrics: production, which covers the extraction of raw materials like spodumene or lithium chloride, and consumption, which includes chemical refining into compounds like lithium carbonate or hydroxide and the ultimate use of these materials. In the case of lithium, consumption stage can actually lead to a surplus when precursors are diverted to build up stockpiles instead of being used immediately to produce batteries.

Adding to the confusion is the ongoing debate over whether lithium should be treated as a commodity or a specialty chemical. Most metals classified as commodities are traded in relatively pure, refined forms—copper cathodes, aluminum ingots, nickel briquettes. Lithium, however, is never traded in its pure metal form.